Monday, August 25, 2014

Over the past weeks we've talked a lot about airline predatory pricing scams.

There's the great airline lobbying scam, a.k.a. the Transparent Airfares Act, which enables airlines to hide the true cost of a flight, sometimes until it's too late for a buyer to change their mind.

Then, there's the recently DOT-approved Resolution 787 which allows the airlines to use your past online shopping history and location to "customize" airfares for you. To escape this pricing trap, clear your cache and cookies repeatedly and disable your location when shopping for airfares.

What made news last week was a study finding travelers could pay eight times as much as their seatmates.

Researchers at Hopper.com said they've confirmed what most travelers have known for years: Airlines charge wildly different rates for seats on the same flight.

The price of
airline tickets purchased within the same cabin can vary by as much as
$1,400 on a single flight, according to the study.

ABC News then
went out and did their own research by interviewing airline passengers
en route from New York to Atlanta. Their coach fares reportedly ranged
from $235 to $600.

Why
should any company be allowed to set different prices the way airlines
do? They claim it's because demand fluctuates in real time, but so does
demand for literally everything else. Yet prices don't change hourly at
the grocery store.

The New American Business Model

Remember what humor columnist Dave Barry said,
that the goal of the airlines was to make sure that no two people on a
flight paid the same price for their tickets. He was right!

Delta
Airlines said about the study that "fares are determined by market
supply and demand," but the carrier did not comment further. Research,
however, suggests that such economic forces do not affect all airlines
equally.

It
would seem the main reason ticket prices vary so much is not about
supply and demand, as the demand for airline tickets is way over what is
available due to mergers and the airlines cutting back drastically on
their flights. This is more about how much the airlines can overcharge,
by data-mining the customer.

Yahoo
Travel editor-in-chief Paula Froelich said "the findings from this
study are pretty shocking," but the "upside to high price variability is
that, yes, there are very good deals. If you can have the time and if
you've got the planning, and it's not last minute, you can get some
really awesome deals."

Yes, Paula, consumers can get some very good deals, if they have lots of time to deal with getting great deals. And those
"good" deals are just the lowest deals the airline is willing to do.
They are only "good" if compared to being fleeced by the other "deals".

Mining Data Like The NSA

The
airlines have become very good at using these sophisticated models
called Revenue Management Systems (also known as Yield Management,
Dynamic Pricing) to vary their prices very frequently.

Some
of these models know about seating preferences and already put that
into their pricing. The models take into account current demand,
historical demand, availability, time until date of flight, and
countless other factors. It can produce surprising results: you may buy a
seat on the day of a flight for $50 and find yourself sitting next to
someone who booked weeks before for $500, and vice versa.

Who
hasn't had pop-up ads appear that were obviously tailored to their
internet's browsing history? And what is to stop the airlines from
collecting your personal information to note your usual vacation times
and destinations? The concept of demand is a very personal thing and the
more they learn about us, the more they can try to charge us for their
services.

The airlines are using what information they can gather online to profile the person purchasing the ticket; the parameters in day, including your age, estimated annual income and even your home's value and then figure out the best way to charge as much as possible.

Imagine if every business ran this
way? Gas, water, and electricity could be priced differently every hour
of the day, unless you prepurchase 90 days in advance, but are not allowed to use the services on Saturday nights. Enter
a store and you get your price now. But if you have five hours a day to
spend researching, and you are flexible, and you luck out, you can save
some money.

Airlines generally do not allow
customers to opt out of the data programs. Several carriers say they
have strict rules on how they use and protect customers' data
internally. British Airways, for instance, said that if passengers ask a
flight attendant not to personalize their service, notes would be added
to their customer profiles to leave them alone, but the carrier would
continue to collect their data.

It should be noted that British
Airlines admitted last year that its employees searched the Internet for
images of frequent fliers in order to "recognize and greet them
personally". The airline has one of the most advanced data programs in
the industry.

Government regulations should help
protect the general consumer against predatory business practices. But
too often, the problem is the businesses committing the infractions are
the same ones helping to write the legislation, impeding the
effectiveness of the regulatory agencies.

In the name of business and
security, we are chipping away at liberty and privacy that not even
science fiction writers could have imagined possible 20 years ago. In
the near future every detail of our habits, preferences, beliefs,
whereabouts, finances, health, affiliations, etc. will be there for the
mining. The airline industry's new business model is just one small
example of where we're headed. Not sure it's a good place. Not sure at all.

Tuesday, August 12, 2014

The price to board a plane is now up for the fifth straight year, making it increasingly expensive to fly almost anywhere.

Airfares are on the rise, outpacing inflation according to the Consumer Price Index. Inflation is 2.1% while the average ticket price is up 2.7%, and now stands at $509.15.

And that's not adding in all the airline junk fees, which increase the price on average another $50 according to the Associated Press.

Despite all that, passenger numbers are not down, but up across the board. More people are flying than ever. The DOT reports that U.S. and foreign air carriers transported 4.2% more passengers this year than last year.

Who are these passengers? Not vacationers. They're people traveling for work. The leisure passenger is being replaced by the business traveler.

The Global Business Travel Association predicts that worldwide business travel will grow 6.9% this year to a record $1.18 trillion. The United States is the largest business travel market, with travelers spending $274 billion last year, a 4.5% increase over 2012.

The Price Is Wrong

On top of all this, fuel prices are down 7.2% from last year, but the airlines have not passed those savings along to the consumer.

Passengers aren't seeing any relief because airlines no longer need to entice fliers with lower fares. There are simply fewer choices today.

A wave of mergers that started in 2008 has left four U.S. airlines - American Airlines, Delta Airlines, Southwest Airlines and United Airlines - controlling more than 85% of the domestic air-travel market. Discount airlines such as Allegiant Air and Spirit Airlines have grown at breakneck speed but still carry a tiny fraction of overall passengers.

That control of the market has enabled the bigger airlines to charge more for tickets and not worry about being undercut by the competition. When you add in the $4 billion a year in junk fees, the result is record profits.

Baggage fees and some others were introduced in 2008 to offset losses from rising fuel prices. However, this year airlines are actually paying less for fuel - $2.96 a gallon so far, and 7.2% less than last year, when adjusted for inflation.

How will this affect us as a nation? We have become increasingly insular over the last few years. And with the cheapest flights to Europe averaging $1000 it will be interesting to see if the isolationist sentiment continues.

For middle-class American passengers, high ticket prices are just another squeeze:

Many just cannot afford to travel anymore due to declining incomes and debts (home mortgages, medical care, student loans).

factoring in excessive airline fees greatly increases the real cost of air tickets, with all the taxes, luggage fees, seat assignments and all the others they can dream up.

Unfavorable exchange rates vs. the USA dollar that make every other cost more expensive in Europe vs. staying in the U.S.

A real decline in paid vacation time by many workers, many are employed in situations where there is no paid vacation time (unlike Europe).

The deadline for the contest is August 15th with awards totaling $15,000, including a $5,000 first prize for the best suggestion.

Yes, prizes

totaling $15,000. Not even a $15,000 top prize. Any idea that'd speed up airport security lines would easily save millions in costs. Wouldn't a prize of $1 million for an idea that significantly improves the checkpoint bottleneck be justifiable and produce results? That tells you how much the TSA values your time and input.

If you're so inclined to participate, no need to suggest the following, they've already been inundated with:

A Thomson Airways aircraft was forced to make an emergency landing at a military base in Portugal after losing an engine over the Atlantic Ocean.

The pilot of a 787 Dreamliner was forced to shut down one of the plane's two engines about one and a half hours into a scheduled nine-and-a-half hour flight from the Dominican Republic to Manchester, England.

The plane, one of six 787-800s owned by Thomson Airways, made a safe emergency landing in the Azores about four hours after the engine was shut down.

For comparison, the A380 has only has 11 incidents over the same time period and 60 over its much longer life span.

First 3 Months Of FlyersRights' D.C. Office

It has been over 10 years since the demise of the last DC staffed office representing airline passengers (the Aviation Consumer Action Project

FlyersRights.org headquarters

218 D St. SE, Washington DC 20003

(1971-2002), which closed its office and laid off all staff due to chronic funding shortages.

While there are others who seek to speak for airline passengers in various contexts, only FlyersRights now has boots on the ground.

But we need our members to step forward with larger contributions to maintain and build on the progress made this summer to sensitizing the Congress to the both the plight of passengers and hopefully motivating major improvement in US air transportation.

More volunteers are needed more than ever. Many Congress persons will not meet with or give serious consideration to FlyersRights' supported legislation without constituent support and need to hear directly from the public about their problems and experiences.

Volunteers are therefore essential and will always be the backbone of this organization.

It has been my experience in decades of public interest advocacy that legislatures and officials do not react, much less enact major reforms without a groundswell of public support.

And unfortunately, it has all too often been only in response to a crisis or disaster with lots of "blood on the ground".

Otherwise, special interests hold sway (there are well over 50,000 registered lobbyists in DC alone) and block any reform that threatens their financial interests.

However, volunteers with professional staff working together can break through the status quo, but not without supreme effort that FlyersRights now has a fighting chance to achieve.

Paul Hudson

President

FlyersRights.org

Some Reflections from our Summer Interns

Briana Carlson

American University

Juris Doctor candidate, Washington College of Law

Prior to my internship with FlyersRights I had experienced the many frustrations that can go with flying, but had not realized how extensive these negative experiences could be. Further I was not aware of how few rights we as passengers had. Over the past summer I have become very familiar with the laws and regulations regarding air travel. I have realized how insufficient these laws are and have had the opportunity to be involved with what will hopefully be the solution.

I learned a great deal about the legislative process, including drafting a bill, I have also learned a great deal about lobbying and talking to congress about the frustrations on flying. Over all I think we laid the ground work to see some movement by congress in the near future. And I can't wait to see what happens. I am so grateful for having had the opportunity to intern for FlyersRights and to have learned all that I have learned.

Andrew Appelbaum

Georgetown University Law Center, Juris Doctor candidateAmerican University

At Flyers' Rights, I have gotten a front row seat to the law and rule making process.

After researching Supreme Court cases and current and recent aviation law and Department of Transportation regulations, I helped develop legislative proposals and rule comments. We met with many members of Congress to show them our proposals and share many of the complaints the organization has received.

We received differing receptions due to many factors such as the amount of complaints received by the Congressman, the number of airlines headquartered in the district, the Congressman's re-election or retirement situation, and the Congressman's relation with committees and subcommittees.

We have received support from many members of Congress and have established relationships to work together in the future.

Getting on a Plane? Put This Number in Your Phone:

1-877-FLYERS6

The FlyersRights HOTLINE!

FlyersRights.org depends on your

tax-dedcutible contribution.

Thank you.

Kate Hanni, founder

with Paul Hudson, President

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An email from United Airlines CEO Jeff Smisek went out to employees last Thursday stating the company will outsource 630 gate agent jobs at 12 airports to companies that pay near-poverty level wages. The airports affected are Salt Lake City, Charlotte, North Carolina, Pensacola, Florida, Detroit and Des Moines, Iowa.

Here's the memo:

WeAreUA!

When it comes to running a safe, reliable and profitable operation, it's important that we manage our staffing efficiently. If we're under staffed, we can't run our operation well. If we're over staffed, we're not managing our costs responsibly. Our staffing levels fluctuate to match our flight schedule, which, as you are seeing from our schedule announcements, includes more seasonal changes than in the past.

We review our staffing on an ongoing basis taking into account not only changes in flight schedules, but also new approaches and technologies together with efficiencies we've realized by the merger of workforces and the implementation of joint collective bargaining agreements. Sometimes we're able to absorb small staffing overages with other work, and we look to do that when we can. However, looking ahead to this Fall, we have determined that we need to reduce staffing at some of our hubs and stations, effective with the change to our winter schedule on October 1, 2014.

These staffing adjustments include reducing below-the-wing staffing at our hubs in EWR, ORD and SFO as well as above- and below-the-wing at some of our line stations, all effective Oct. 1, 2014. About half of these adjustments overall involve full to part-time moves. While most of these are seasonal schedule adjustments, we are also making some non-seasonal staffing adjustments. Separately, we are adjusting staffing levels in BOS as a result of completing the integration of our separate operations there into one.

Airlines have long had reductions-in-force from time to time. It's how we make seasonal and structural adjustments to competitively staff our operations. As I said earlier, there are times when we are able to manage seasonal staffing overages, but the current numbers are not manageable. While we're accustomed to these RIFs, they are always difficult. Employees affected by these reductions, including moving from full to part-time, will receive notice either by mail or in-person over the next several days.

Over the past several months, we've introduced both broad and targeted early out programs related to our schedule and staffing changes in CLE and the transfer of work to outside vendors at 12 line stations. At the same time, we've worked with the IAM to bring positions in house in our DEN and IAD hubs as well as in PHX and, recently, HNL.

Along these lines, we announced at DEN yesterday that we're making further changes by bringing in-house below-the-wing positions for our regional transfer of baggage (TOB) operation there. At the same time, we are moving our DEN de-icing operation to a vendor who will be dedicated to the United operation, both mainline and regional, and can flex up and down based on weather-related needs. These moves will not result in a net loss of jobs, nor any changes in pay, for our DEN employees, and we expect to improve our MBR and customer service by performing this work more efficiently.

We realize that there have been a number of staffing changes, both in-house and out to vendors. A number of employees' lives have been affected by these, and we take this into account when we make these decisions. Please know that we are continually looking to create opportunities while taking the steps we have to in order to be competitive.

Last week, we announced our second-quarter results, which were a marked improvement from the first quarter. We want to continue to be profitable and have a sustainable business with a bright future. While we have a way to go, we are making progress. We hope that we can create further opportunities in the future, while making the difficult decisions today.

Thanks to each and every one of you for the great work you've done this summer. Our on-time performance, our MBR performance, our Customer Satisfaction scores and our financial performance are all moving in the right direction, and you should take pride-and credit-for that.

Substandard Service for Travelers

The hugely profitable airlines benefit from a ragtag army of poorly paid workers.

Airlines have allowed service quality to decline despite reports that find carriers that focus on people and processes have greater passenger satisfaction.

If you were a passenger this summer, chances are very good that you were delayed at some point. Airport staffing at some airports is at such low levels that you can easily wait an hour for a ramp to be brought out to your plane at 1 a.m., your bags to arrive on the carousel, or in the winter months, to be de-iced.

Once your flight is late, chances are good you will miss your connecting flight. Mainline flights have been cut back so they are fuller and less frequent. Fewer direct flights means packed planes and less convenience for the traveler.

Then, you will miss the next two or three because they are flying so full.

Plane Greedy

Record profits and no relief for passengers, or employees. Steve Silberstein, Executive Producer of the film Inequality for All said:

"United CEO Jeff Smisek gave himself $8.1 MILLION dollars in 2014. If he had cut his salary to a "lousy" two million dollars a year instead -- that would save about as much money as the purported saving of lowering the pay of those 630 jobs."

Soon you wil be able to fly coast to coast and never interact with the airline's real employees - only outsourced contractors. From the gate agents, baggage handlers to the regional jet pilots and crew- none will work for the airline.

As FlyersRights has pointed out previously, being a virtual airline does not end so well if anything goes wrong.

American Airlines said the vast majority of its domestic airports already are staffed by Envoy or other contractors. Delta said only 42 of its 230 domestic airports employ Delta employees exclusively. Thirty-three airports have Delta workers as customer-service agents and Delta Global Services workers employed as ramp workers. In 80 airports, Delta Global Services workers perform both functions. Another 75 airports use other outside vendors.

Shortchanged

Employees that work directly for United have an incentive to help the company and themselves by providing superior customer service. Subcontractors, on the other hand, have no such incentive and are very likely to provide poor service to customers, reflecting very negatively on the company.

How is it that an industry can profit through fewer services, more wait time and reduced flights?

It all started with food services cut, although the meals weren't very good. Now passengers pay extra for everything from bags, to a better seat or early boarding. This is being allowed because travelers have very few options. There are only a few major airlines left in business.

This is what I sent to the TSA - I am surprised that there is no press about this at all and I am wondering if other frequent flyers are talking about it.

I signed up to participate in the TSA Precheck program when it was initially available. As a frequent traveler I spoke highly of the program. I paid 100.00 to join, I was finger printed, my background was checked, I was photographed and interviewed by a customs agent. I felt sure that that all of the steps were taken to insure that not only was I a known and trusted traveler, but those who participated in the program were as well. However, the recent push by TSA to signup additional travelers has me concerned about security and in speaking to several TSA agents while traveling recently, they agree.

Here's what concerns me:

Random travelers selected to enter the precheck line - how is that secure?

The precheck line merges with a non-precheck line as it enters into security screening - how is that secure?

As TSA signs up more infrequent travelers the pre-check line will grow as long as the non-precheck line - so I ask what is the point? Trading revenue generation for security?

New enrollees now pay 85.00 versus my payment of 100.00 and when I spoke to a recent enrollee he informed me that he was not interviewed by a customs agent...so again I ask how is the system secure?

I will continue to use the precheck program until the lines become as long as the non-precheck lines, which I am certain they will and hopefully by that time, I will be retired and an infrequent traveler like the majority of the people being pushed into the program.

-DS

Dear DS,

Yes, the most distressing aspect of TSA moving non-approved people over to the Precheck line is the fact that it completely undermines the intent of the program. The program was designed and promoted as an expedited screening process for those travelers who were willing to subject themselves to a background check and pay the fee to cover the program. The concept was that these are "known travelers" (based on that background check) and thus do not need as extensive of screening. But if anyone can be shifted over to the line, doesn't the integrity of the program become lost?

I posed this question to TSA media relations, and here's their answer:

To improve the screening process, TSA leverages a number of programs to direct eligible passengers to the TSA Pre✓™ lane, where travelers may receive expedited screening. Managed Inclusion, a risk-based approach, combines the use of multiple layers of security to indirectly conduct a real-time assessment of passengers at select airports. This enables TSA to identify eligible passengers for expedited screening through TSA Pre✓™ lanes, which improves security, efficiency and the passenger experience.

Kendall - that's the same response they sent me and that may make sense when they select those people through the boarding pass process, but when they just merge lines it doesn't. The lack of security for increased revenue concerns me and as a few TSA agents told me...it concerns them too. Thanks for the reply

www.flyersrights.org

Intention of this blog

We are commited to solutions for promoting airline passenger policies that forward first and foremost the safety of all passengers while not imposing unrealistic economic burdens that adversely affect airline profitability or create exhorbitant ticket price increases.

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Proposed Airline Passengers' Bill of Rights

All American air carriers shall abide by the following standards to ensure the safety, security and comfort of their passengers:

Establish procedures to respond to all passenger complaints within 24 hours and with appropriate resolution within 2 weeks.

Notify passengers within ten minutes of a delay of known diversions, delays and cancellations via airport overhead announcement, on aircraft announcement, and posting on airport television monitors.

Establish procedures for returning passengers to terminal gate when delays occur so that no plane sits on the tarmac for longer than three hours without connecting to a gate.

Provide for the essential needs of passengers during air- or ground-based delays of longer than 3 hours, including food, water, sanitary facilities, and access to medical attention.

Provide for the needs of disabled, elderly and special needs passengers by establishing procedures for assisting with the moving and retrieving of baggage, and the moving of passengers from one area of airport to another at all times by airline personnel.

Publish and update monthly on the company’s public web site a list of chronically delayed flights, meaning those flight delayed thirty minutes or more, at least forty percent of the time, during a single month.

Compensate “bumped” passengers or passengers delayed due to flight cancellations or postponements of over 12 hours by refund of 150% of ticket price.

The formal implementation of a Passenger Review Committee, made up of non-airline executives and employees but rather passengers and consumers – that would have the formal ability to review and investigate complaints.

Make lowest fare information, schedules and itineraries, cancellation policies and frequent flyer program requirements available in an easily accessed location and updated in real-time.

Ensure that baggage is handled without delay or injury; if baggage is lost or misplaced, the airline shall notify customer of baggage status within 12 hours and provide compensation equal to current market value of baggage and its contents.

Require that these rights apply equally to all airline code-share partners including international partners.